Detroit November 2021- Key Takeaways
- Gary Kravitz with Madin Hauser’s office has been doing a LOT of apartment deals, and the prices keep going up.
- Martin Lavelle with the Federal Reserve Bank – The economy slowed way down and was only at a 2% growth. However, the economic activity seems to be picking up now. Jobs continue to be below the forecasts. Labor participation is still down due to a big retirement trend and the pandemic. Other factors include some people simply being fearful of getting sick, and some simply need to watch their children. Unfortunately, many childcare centers have closed recently. There are also the job jumpers, which is a large group of workers who go from one job to another usually because of a pay increase. They have bargaining power right now with the labor shortage. These dynamics have kept the job market in chaos lately. Stories about the material shortages change every week, so it is hard to keep up. I did hear that 60% of new home owners are having particular difficulty acquiring doors and windows. The labor shortage is impacting most projects too. Demand for many things is still high, but the markets are experiencing difficulty fulfilling orders.
- Tom Barrett with The State Bank– There is a strong demand in the lending market because a lot of lenders have too much cash. Business as usual here. We continue to see the labor shortage, especially with truckers. Drug store shelves are empty, even right next to the door. Loan demand remains strong.
- Nick Maloof with Associated Environmental Services – Business is getting busy again for us. I did the math and it seems we only have 39 more working business days until the end of the year, if you exclude the hunting season and holidays. We are already booking in early December, so if you need something done before 2022, get it on the books now. Overall, clients are slowing things down until the spring of 2022. For phase one projects, we’re still able to get it done in 4 to 6 weeks.
- Dan Stys with Professional Engineering Associates – Thank you to Nick and Mike Sabrosky for helping us with a project. Our business has been very brisk, especially the industrial and commercial retail, as well as the residential sectors. Proposals have been very solid over the last few months. Development activity is brisk. Investors see an opportunity and demand is high in all sectors.
- Todd Shelly with Professional Engineering Associates – We have a lot of proposals for projects that begin next spring. By then the supply chain and labor force issues might be a bit easier. Right now we are being forced to raise our pay for some help, so our prices will probably go up too to meet that.
- John Godwin with Marcus & Millichap – The marketplace is robust, but inventory is not, Multi-family are very active, and single tenants are good too. We are looking for industrial properties as we have many out-of-state shoppers who are interested in Michigan. Many looking for real estate shelter.
- Mike Ziecik with NAI Farbman – The market is so strong, but there is nowhere to put it. The brokerage side is steady. There is a lack of industrial and prices are very high. Even empty buildings have very high price tags now. Industrial buyers need to understand that those assets are in short supply and move fast. They are going to be expensive right now because of the shortage, and most need some heavy rehabbing. Our business is very good. We need to get these shoppers to look at different options, like properties that are vacant lots.
- Dave Dismondy with District Capital – Our focus here is on things we can control. It is very easy to maximize your debt right now and it is also easy to refinance right now. We have the ability to do a 75% cash out right now, where that might not be available in a year or two. If you have a lot of equity built up right now, which a lot of people do, we can do a 65% loan full term with interest only. We are trying to get a lot out by the end of the year.
- Matt Fenster with Etkin Real Estate Solutions – There are a lot of investors migrating to the healthcare sector now. Healthcare sector has done well during the pandemic. I have a portfolio with John Godwin that is looking to get about an 8 cap. There is so much money, it is pushing some values down. In the office sector, there are so many buildings that it is a blood bath. Many vacancies and it is not pretty. Brad Rosenberg is the one who is probably working on rehabbing old malls.
- Lee Utke with Madison Marquette – We mostly do large retail projects specifically, but have also stepped into doing a few residential projects with commercial space and community rooms/space. I co-manage corporate solutions. Right now we are buying vacant and almost vacant retail assets and developing a portfolio of these assets. We are an all-cash buyer. Currently, there is too much money chasing too few opportunities, and we are finding it difficult to find and secure our ideal assets. Many investors – like 20% – are currently waiving the due diligence and paying cash for their acquisitions. We don’t do that and have to pass on many opportunities to others who are willing to take those shortcuts.
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